June 2016 – Net Worth Update

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After seeing how helpful reporting your net worth can be from other bloggers, I decided to start tracking ours over a year ago. However, instead of tracking our net worth each month like many do, we decided to report it every 3 to 9 months.

There are just too many variables to track it month to month. For example, the value of our home can really fluctuate from one month to the next. That is why we have decided to spread out the frequency of when we report.

We are tracking our net worth through our Personal Capital account. Without this great tool, I can tell you that we wouldn’t have the time or patience to track our net worth.

Now on to our fourth net worth update –

June 1, 2016 Net Worth

As of June 1st, 2016, our net worth is $479,682.09!

While my wife and I don’t see the need to report our net worth each month, periodic updates throughout the year can help give us an idea of where we are. This month, we decided to compare our current net worth for the entire year by looking back to June 1st, 2015.

Our net worth in June 2016 rose by 6.1% compared to last June 2015. That was an increase of $27,582.75 over those 12 months.

June 2015 Net Worth = $452,099.34June 2016 Net Worth = $479,682.09

Net Worth Change = + $27,582.75

A high level breakdown of our assets and liabilities are detailed below.

Note – Normally we compare our assets and liabilities to the previous report. However this time we are comparing it to one year ago. I want to see how we grew our net worth over the past year.

Assets

We currently have 3 main asset categories that we are reporting on – investments, cash, and home value.

To keep things simple, my wife and I decided not to report the value of our automobiles as an asset. My 15+ year old car doesn’t hold much value and I don’t consider our minivan much of an asset either. We are however reporting our minivan loan balance as a liability.

Investments

This category includes our dividend income portfolio, 529 plans for the kids, emergency fund accounts, retirement accounts, etc. It is currently our highest valued asset and we are constantly working every single day to make it grow.

Over the next couple of years, we expect to see major gains from our investments – which will push our net worth much higher.

All is not lost however. While the value of our investments did not grow by leaps and bounds, our dividend income did. Plus, our projected future dividend income is growing like a weed so I expect next June our investment numbers will be much, much higher.

Cash

Our current cash includes all of our checking and savings accounts. It is difficult to analyze the change in our cash from year to year. We have seen a drop of almost $4,000 in cash since last year. A lot of this could be attributed to putting our extra cash to work in the stock market.

I would much rather have our money working hard for us by investing in top notch companies that will produce income. The other option would be to leave the cash in a savings account and earn pennies in interest.

June 2015 – Cash = $9,054.23June 2016 – Cash = $5,236.42

Cash Change = ($3,817.81)

I like to have a decent cash reserve, but not at the cost of missing out on dividend producing stocks.

Home Value

I have mentioned it several times here, but I am not a huge fan of reporting on our home value in our net worth. However, it is one of our largest assets so we need to include it.

We are currently using the Zillow estimate on our home, which is calculated directly through Personal Capital. This asset will likely see a bunch of ups and downs each time I report our net worth.

This is the most volatile asset that we currently have and the values listed above are only estimates. There are no guarantees we could sell our home for $313,000+ today.

Despite the limitations of reporting our home value, it is kinda neat to look at it compared year to year. I will be interested to see what the value of our home is next June.

Total Assets

Overall, our home value had a very nice jump and our total investments certainly shot up from all the new money we are investing. Our cash has declined a bunch, but that isn’t necessarily a bad thing considering the new investments we are making.

Liabilities

There are 3 main liability categories that we will report on. The first and largest is our mortgage balance. Then we have a car loan for our family vehicle. Last, we charge almost all of our expenses through 2 credit cards.

Mortgage Balance

Our road to financial independence would likely get much easier if we were to sell our home. We could either find a cheaper home to buy, go the RV route as many others have done, or even rent a place. Owning a home is not cheap, but having a comfortable home to live in with our family is something that we value.

At this point, owning a home is a trade off we are willing to make.

The good news is that we have a decent mortgage rate on our 30 year loan. My wife and I would love to pay extra on the mortgage each month (which we have done in the past) but for now we are putting our money to work buying dividend stocks.

Each time we report, we should expect similar results. Nothing fancy here, just paying down our mortgage debt one month at a time.

Car Loan

We have an incredibly low rate on our auto loan (1.56%), so it doesn’t bother me that much to make these payments. Just like our mortgage, every month we see our principal decreasing and our net worth increasing as a result.

Net Worth Summary

Overall I think it was a good year of growing our net worth. Our mortgage balance and car loan both dropped as expected. Increasing our net worth is just as much about lowering (and limiting) our liabilities as it is about increasing our assets. This is why we decided to report our net worth periodically. We always seem to talk about our assets like dividend stocks here but not too much about liabilities.

In addition to tracking our liabilities, it is fun to track our assets including our investments. Every month we report our dividend income. While this is a big focus area for us right now, it is only a small portion of our investments. These monthly reports don’t include other things like 401K’s and 529 plans. Reporting our investments as assets helps give my wife and I a clearer picture of our total net worth.

Do you track your net worth? How often do you track it? Are you focused on growing your assets or reducing liabilities or both equally?